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3 Things You Should Know About Small Business: June 6

NEW YORK (MainStreet) -- What's happening in small business today?

1. There was a drop in big bank lending last month. Despite Bank of America's (BAC) and other big bank initiatives to increase their small business lending, Biz2Credit's Small Business Lending Index showed a slight drop in small business lending by large banks last month.

According to the Index, loan approval rates from large banks (those with more than $10 billion in assets) dipped to 10.2% in May from 10.6% in April. The approval rate is still above the year-earlier percentage of 9.8%, Biz2Credit says.

But small bank loan approvals also fell slightly to 45.5% from 45.9% in April. The approval rate is slightly above the year-earlier rate of 45%, the report says.

Credit unions and alternative lenders, on the other hand, increased lending in May compared both to the prior Month and year-earlier period, the report says. Credit unions approved 57.6% of small business loans in May, while lenders who offer alternative financing, such as factoring and merchant cash advances, approved 63.2% of applications.

The monthly index analyzes 1,000 loan applications through Biz2Credit.com. Loan requests range from $25,000 to $3 million from companies in business more than two years with an average credit score above 680. Biz2Credit's online platform connects business borrowers with more than 1,100 lenders nationwide.

"This is the third month in a row that big bank lending to small businesses dropped. Small banks decreased their lending approvals for a second straight month, as well. Combined with another poor jobs report, continued jitters in Europe and uncertainty on Wall Street, the economy looks like it is slowing," Biz2Credit's CEO Rohit Arora. "One thing cannot be denied: lending for small businesses, which create the lion's share of new jobs, has stalled."

2. Business plans that turn heads. While there are differing views about the relevancy of a formal business plan these days, the notion remains the same: if you're asking for money, whether a few thousand from family or several million from strangers, "you'd better have your ducks in a row before you ask," YoungEntrepreneur.com co-founder Matthew Toren writes. In other words, create a business plan.

"[Being] able to describe your business, the industry you operate in and the potential market for your company is downright vital. And you won't generally address all of those aspects until you actually sit down and write up a plan," he writes.

Toren offers a checklist of "minimum information" as well as some extras that will increase your chances of getting financing that should go into the plan -- like an executive summary, a company overview, the purpose of the investment all the way down to your marketing plan, risk analysis and a financial plan, among other things.

3. June's small business checklist. While June officially kicks off summer -- typically a time for relaxing and taking some vacation time, small business owners should use the time to offer some perks to customers and employees, according to Forbes contributor Deborah Sweeney.

Start by creating a seasonal discount or -- in some cases -- a related product, though Sweeney cautions that coming up with a new product requires several months of advance planning.

Check up on any deadlines you have coming due, such as an annual report, says Sweeney, who is also the CEO of MyCorporation, an online document preparation service for small businesses.

Clean out your email inbox, preferably using an organization system for important messages you don't want to throw away, such as creating folders and an archiving system.

Offer employees -- when possible -- a flexible schedule. This will go a long way for employee morale since kids are off from school, families want to take vacation and friends want to go on road trips, Sweeney says.

"If you aren't careful, your office might start looking emptier than you expected, faster than expected. Work with your team to accommodate any time off requested (which should be placed as soon as possible) and present the opportunity to have a more flexible schedule created," she writes.

-- Written by Laurie Kulikowski in New York.

To contact Laurie Kulikowski, send an email to: Laurie.Kulikowski@thestreet.com.

To follow Laurie Kulikowski on Twitter, go to: http://twitter.com/#!/LKulikowski

>To submit a news tip, email: tips@thestreet.com.

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